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Economic Linkages Between South Africa and Mozambique - August 2002

ABSTRACT
 
This paper results from a desk-study about the state of economic linkages between South Africa and Mozambique. Therefore, the paper only considers existing data and has involved no primary research. The study tries to address, amongst other questions, what the weaknesses and strengths of integration of the two economies are. Therefore, it focuses on the analysis of flows of goods and services, labour and capital between the two economies, as well as a speculative analysis of what, and how, key future developments may shape the economic relationship between South Africa and Mozambique. The paper argues that economic linkages between the two countries have been built over the years as a result of dynamic forces (linkages, agents and public policy) that have been operating in both economies. Such dynamic forces, for example, the minerals-energy complex of South Africa, are still in operation. In recent years, the mechanism by which the dynamic forces of South African capitalism influence the Mozambican economy has changed from recruitment of migrant labour to foreign direct investment. This change is happening in other Southern African countries as well. From a regional migrant labour policy, South African capitalism has moved to regional investment policies and strategies that favour expansion and internationalisation of South African firms, and control over production and markets, at the same time that labour and labour relations are restructured at home. Some of the characteristics of the Mozambican economy, such as the high import dependence of, and low export sensitivity to, investment and growth, have favoured the direction of dominant integration that links the two economies. Future developments will depend on what type of economy is developed in South Africa, how Mozambique addresses its weaknesses, and what type of economic integration takes place in the region.

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